Introduction
English courts recently heard and determined three separate applications with near mirroring facts for anti-suit injunctions (“ASI“) brought by (i) Deutsche Bank, (ii) Commerzbank and (iii) an unknown entity given anonymisation of the judgment, all brought against RusChemAlliance LLC (“RCA“), a Russian entity in which Gazprom has a direct interest. All three cases relate to proceedings RCA initiated in Russia in breach of the relevant arbitration agreements. The application for ASI was refused in respect of case (i) at first instance but granted upon appeal, granted at first instance in respect of case (ii) and refused at first instance in respect of case (iii). Given its precedential value, this article focuses primarily on case (i), i.e., the Court of Appeal’s decision in Deutsche Bank AG V RusChemAlliance LLC [2023] EWCA Civ 1144.
In that case, the English Court of Appeal overturned the Commercial Court’s (Bright J) decision, in which the lower court had refused to issue an ASI in the context of an English law governed arbitration agreement that expressly provided for ICC arbitration in Paris, by granting the requested ASI. An ASI is a court order that prohibits a party from commencing or continuing with proceedings in a jurisdiction or forum other than that contractually agreed, and is available as a matter of English law.
The Court of Appeal held that England was the most appropriate forum to consider and determine a request for ASI in the circumstances, particularly given that whilst French courts would not themselves issue ASIs, they would recognise them. The appellate court therefore disagreed with the Commercial Court that an ASI should not be granted in circumstances where it is not a remedy available under the law of the seat (i.e., French law).
Factual Background
In September 2021, Deutsche Bank AG (the “Bank“) issued an advance payment (the “Guarantee“) in favour of RCA, in connection with a contract that RCA had entered into with a German construction company (Linde GmbH, Linde Engineering (“Linde“)) relating to the construction of a liquefied natural gas (LNG) plant in Russia. The Guarantee was subject to English law and provided for arbitration in Paris.
Shortly after Russia’s invasion of Ukraine and the various sanctions adopted, Linde suspended its works under the construction contract. RCA subsequently terminated the contract and demanded the return of advance payments made – a sum exceeding EUR 738 million. Upon Linde’s refusal, RCA made a follow-on demand to the Bank invoking the Guarantee, seeking the maximum possible EUR 238 million. The Bank declined to pay for sanctions compliance related reasons. RCA thereafter started proceedings against the Bank in the Arbitrazh Court of Saint Petersburg and Leningrad Region (“the Russian proceedings“), contending that it would not have access to justice if the ICC arbitration were to be pursued in Paris.
ASI application to the English Commercial Court
The Bank responded to the Russian proceedings by (i) commencing ICC arbitration and (ii) seeking an ASI from the English court pending the constitution of the arbitral tribunal. The Bank also sought an anti-enforcement injunction (“AEI“) restraining RCA from enforcing any judgment obtained in the Russian proceedings.
The application to the English court was premised on the argument that the Russian proceedings were in breach of the arbitration agreement, and that English courts should ensure that English law contracts are performed. The Bank further contended that since an ASI was not available as a matter of French procedural law, the English court was clearly the proper forum to determine and grant the relief.
Bright J was not persuaded and refused to grant the ASI application. He reasoned that it would be inappropriate to grant the interim relief given that the seat of arbitration is in a foreign country, especially in circumstances where that foreign country “demonstrat[es] an objection to ASIs granted by foreign judges” and its courts “would not enforce an interim ASI granted by [the English] court…” In short, the court refused to grant the ASI because it was considered that such would be inconsistent with the approach of the courts of the seat (and hence the curial law).
Court of Appeal’s decision
The appellate court disagreed and granted the ASI requested, as well as the AEI. Nugee LJ (delivering the Court’s judgment), in holding that England and Wales was the proper place in which to bring the claim, explained that English law requires, as a matter of policy, that parties adhere to their contractual obligations, which particularly applies in respect of arbitration agreements by virtue of which the parties impliedly agree not to litigate elsewhere. Nugee LJ therefore reasoned that an “English court, faced with an English law governed contract containing a promise by a party not to do something and a threat by that party to do the very thing he has promised not to do, will readily and usually enforce that promise by injunction“. It was highly material to the Court that the evidence before it was clear to the effect that French law “has no objection in principle to (and will recognise) the grant of an ASI by a court which can by its own procedural rules grant one“.
The Court did not address the difficult question of whether an ASI should be granted in circumstances where the foreign court would regard the grant of an ASI by the English court as inappropriate and unwelcome. It left the matter to be determined by a future court which would have the benefit of detailed submissions from counsel.
Related cases
It is noteworthy that the Commercial Court refused to grant an ASI in another case with almost mirroring facts, ruling that it lacked jurisdiction. In the anonymised decision (G v R [2023] EWHC 2365 (Comm)), Teare J ruled that the governing law of the arbitration was French law, not English law, principally because of the selection of Paris as the seat of arbitration. He further explained that, even if he were wrong on holding that the governing law of the arbitration was French law, he did not consider that England was the appropriate forum for the request for an ASI in circumstances where the “arbitration agreement [] provides for arbitration, not in England, but in another jurisdiction“. He refused, amongst others, the assertion that substantial justice cannot be done in the arbitration in France so as to necessitate the granting of the ASI.
Teare J was made aware of the Court of Appeal’s decision in Deutsche Bank but did not consider himself bound by it on the basis that such was an ex parte appeal and that the appellate court had not the benefit of submissions from the defendant / respondent, as he had done. As such, he considered the appellate judgment to be of limited assistance.
Contrastingly, the Commercial Court in Commerzbank v RCA [2023] EWHC 2510 (Comm), took a different view, siding with the Deutsche Bank decision, albeit for differing reasons. Bryan J concluded that England and Wales was the appropriate forum in which to pursue the ASI in the circumstances, for the following reasons. First, both the arbitration agreement and the bonds (relevant to this case only) were English law governed. Secondly, by providing for ASIs, English law offered a juridical advantage that French law did not. Thirdly, neither Russia nor France were the appropriate places to obtain ASIs. Russian courts accepted that proceedings could be commenced in Russia, despite a clause in the bond calling for dispute resolution through ICC arbitration. Further, French courts cannot offer ASIs, leaving English courts as the proper place to bring a claim for an ASI.
Conclusion and key takeaways
The Court of Appeal’s judgment is a welcome development, with English law taking a pragmatic approach to differing judicial capabilities and approaches concerning the availability of injunctive remedies in support of arbitrations. The almost unmatched power that the English courts have when compared to their counterparts in assisting and enforcing arbitration agreements will further reinforce the preference of using English law as the law applicable to arbitration agreements. Nevertheless, it is to be seen whether Teare J’s divergent approach will gain traction amongst the members of the judiciary, requiring a re-assessment of the issues by the Court of Appeal, or even by the Supreme Court. The same is true in respect of seats of arbitration, especially given the current uncertainty of whether ASIs will similarly be granted in circumstances where the relevant foreign court is opposed to the remedy and would object to its enforcement concerning proceedings seated there.
